On June 11 2020, Bill Hwang received a text message from an investment analyst at his family office, Archegos Capital Management, which had quietly become one of Wall Street’s largest stock trading operations. One of Archegos’ biggest positions, the stock of ViacomCBS, had held up well on a down day in the market and the analyst wanted to ask if the price improvement was “a sign of strength?”“No,”...
Even today, the scope of Archegos remains stunning. According to the indictment, Hwang’s personal fortune grew from $1.5 billion to $35 billion without the public knowing, and the leverage drove the size of Archegos’s market positions to $160 billion. “Despite the size of Archegos’s positions, the investing public did not know that Archegos had come to dominate the trading and stock ownership of multiple companies,” federal prosecutors said.
Hwang was once one of the biggest Tiger Cubs. He launched Tiger Asia Management in New York to trade stocks in markets like Hong Kong, Korea and Japan, and managed as much as $8 billion, mostly for clients. But Tiger Asia suffered heavy losses during the 2008 financial crisis and the fund settled with the U.S. Securities and Exchange Commission over insider trading issues in 2012 related to trades Tiger Asia conducted in Hong Kong.
The way federal prosecutors describe it, Hwang’s behavior changed dramatically in March 2020, just as markets started to rebound following the initial COVID-19 lockdowns. He dramatically pushed the leverage of his portfolio and his use of derivatives instruments, and used his increased market power, largely hidden from public view, to support and defend the prices of specific stocks through manipulative trading strategies, federal prosecutors say.
It’s about time we abandon centralised institutions and move to decentralisation. Solved